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Includes Product line decisions along with their relative importance. The concept of product life cycle is also depicted using apt examples.
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Product Line Decisions & Product Life cycle
Seminar Presentation
What is a Product Line?
A product line is that combination of products which;
Belongs to a single manufacturer Shares similar Attributes Serves the common general purpose but; Targets different market segments
Samsung
Why Product line decisions?
Provides better market access
Involves huge investment/disinvestment
Products have close mutual influence
Product Line Strategies
Expansion of product lineProcess of adding more products to the lineValid only if; a) There is a well established brand arena &
customers are accustomed to switch.b) Competitor lacks a comparable productc) Competitor have already expanded to the
proposed area.
Contraction of the product lineDropping a product from the line.The reasons behind a drop may be;a) Fine tuning the market performanceb) Eliminating a poor performing productc) Uplifting a product with more potential
• This is a much difficult task since much money is already been invested and hence products are allowed to linger on until they become a loss.
Out In
Alteration of the existing productsAn alteration may be in;a. Designb. Size c. Colourd. Texturee. Flavourf. Packagingg. Advertising appeal
Developing new use for the existing productsThis is intended to attract a new category of
customers to the manufacturer without forming a new product.
Investments in R&D and Advertisement is required.
Trading UpAdding a high priced prestigious product to
the line so as to increase the sales of the existing low priced product.
Rs. 2000 – Rs. 2500
Rs. 8000 -Rs 9000
Trading DownIntroducing a low priced product to the
prestigious line so as to cater increased demand.
Factors influencing Product Line Decisions
Changes in market demand
Competitive action
and reaction
Marketing Influences
Product influences
Financial Influences
Changes in market demand
Competitive action and reaction
&
Marketing Influences
Financial Influences
Product Influences
Concept of Product Life Cycle
The conceptEvery product has a life cycle, just as in case
of human beings.A Product after being introduced in to the
market, goes through different stages which is categorised on the basis of product, profit, competition and market behaviours.
It is rather a managerial tool for forecasting & strategic planning.
Stages of Life Cycle
1. Introduction2. Growth3. Maturity4. Saturation &5. Decline
Introduction stageProduct is Introduced in the market for the
first time.Slow growth rateNegative or low profitsHuge marketing expensesNo competitionHighly volatile in nature
Growth StageSales rises at an increasing rateProfitable returns from the marketReduced promotional expensesHard work for the firm to establish
dealerships & distribution outletsCompetitors starts to explore the market
Maturity StageSales are still increasing, but at a decreasing
rate.Severe competitionProfits fall in line with falling prices, which is
unavoidable to retain market share.Investments in promotional measures to
differentiate the productNew distribution strategies & alliances
Saturation StageSales are stableProfits fall drasticallyCompetition is at the peakContinued need for promotion to maintain
salesFirm has to plan product modifications
The old TV is getting replaced by..
DeclineCharacterised by falling sales for the whole
industry.Prize cutting is continued and profit is at zero
level.Firm has to take a major strategic decision
whether to continue with the product or abandon it.
This old roofing tile industry is now switching to...
More examples for product replacement
The PLC Graph
Graph with Profit curve
An old PLC Curve!!
ConclusionEvery product has got a life cycle and every
product will pass through the stage of decline someday.
But, through effective product line decisions and other strategies, we can extend its profitability period much longer to our benefits.
Thank You!!